It is all obvious or trivial except…

On Sky and VAT

A magazine for satellite TV customers published by BSkyB was used as a tax avoidance scheme that saved the company up to £40m a year.

The broadcaster had been saving millions in VAT by charging satellite customers a nominal £2.20 a month for the Sky magazine, using a tax loophole that has now been closed. Magazines, along with books and newspapers, are normally zero-rated for VAT, and this meant Sky could avoid VAT on a small but significant percentage of revenue. The saving, at about £3 to £4 per person, would have amounted across Sky\’s 10 million subscribers to at least £30m to £40m a year.

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2 comments on “On Sky and VAT”

Not an accountant but as I understand it, the customer paid the same before as now. What was happening is Sky was converting £1.76 + VAT of the monthly rental to £2.20 of magazine. I assume the magazine cost less than 44p to print, the balance being a small extra margin per customer per month.